Ground Rent In Malta
Ground rent or emphyteusis, 'cens' in Maltese is an imposition upon immovable property.
Ground rent is imposed upon and reflects only upon a tract of land or airspace and thus affects any structure that is constructed on it. It does not reflect upon the ownership of the building that is constructed upon it. The concept behind most ground rents is financial and thus is accompanied by a fee, in most cases, it is monetary however some ancient ground rents impose the payment of livestock or a mass. It may also however be used to impose other obligations such as building height, use of, etc. Such conditions are quite rare however it is worth noting that redeeming of the ground rent will not nullify such conditions.
Imposing a ground rent
When selling a property, an owner may impose a ground rent or a sub-ground rent as applicable. The person or entity imposing a ground rent is referred to as the dominus whilst the person acquiring the property is known as the emphyteuta. Ground rents are paid annually thus referred to as ‘annual ground rent’. When a contract takes place that includes the imposition of a new ground rent then the purchaser will be required to pay stamp duty.
Recognition fee (Laudemium)
Upon each transfer of a title which includes ground rent, a fee, generally equivalent to one year of ground rent becomes payable to the superior landlord, this is called a recognition fee or ‘laudemium’ in Maltese.
Different Types of Ground Rent
Perpetual - As the word implies this ground rent is established at a fixed rate in perpetuity.
Perpetual Revisable - Similar to Perpetual however when imposed it is agreed that the fee is adjusted every specified period to reflect inflation. Commonly this type of ground rent has been pegged to the cost of living, minimum wage etc
Temporary - As the name suggests this type of ground rent will have an expiry date and for that reason may be comparable to a long lease. In these cases, land or airspace is being granted (b’cens) for a predefined period, commonly 99 or 150 years. Upon termination of this period then the land/airspace is meant to be returned to the original owner. In the cases where the property is the ordinary residence of the emphyteuta the right to convert the title. Depending on circumstances within the law it may be converted into a lease or a perpetual ground rent.
Temporary Revisable - Similar to Temporary however when imposed it is agreed that the fee is increased to reflect inflation and adjusted every predetermined period, for example, every 25 years.
Redemption of Ground Rent (Buying the ground rent)
Perpetual (non Revisable) - Perpetual ground rent may be redeemed at any time by capitalizing at 5% either by contract between the parties or by filing a schedule of redemption (cedola) in court. An easy way to calculate this is to multiply the ground rent by 20 i.e. Gr €50 x 20 = €1,000.
Perpetual Revisable - This type of ground rent will only allow an owner to redeem the ground rent within a period of 12 months after each and every revision. During this period the owner of a property has every legal right to redeem the ground rent at 5% capitalization (x20).
Temporary (non Revisable) - There is no onus upon a superior landlord to sell this and each case must be negotiated.
Temporary Revisable - As above each case must be negotiated.
Joint Office
Grounds belonging to the government are administered by the Joint Office. From time to time the joint office issues schemes whereby homeowners can apply and redeem temporary ground rents at very competitive social rates. Unfortunately, the processing of these redemption are notoriously pedantic and take years to conclude. If a homeowner has applied to redeem and the property is sold to a new homeowner then the application is transferred onto the new owner.
